Ravi Kumar S, the CEO of Cognizant, received a substantial compensation package of $22.5 million for the fiscal year 2023, as disclosed in the company’s latest proxy statement filed with the US Securities and Exchange Commission (SEC). Having previously served as president at Infosys, Kumar stepped into the CEO role at Cognizant in January 2022.
Cognizant experienced a challenging financial year in 2023, with the company reporting a slight decline in constant currency revenue by 0.3%, totaling $19.4 billion. This downturn was largely attributed to a persistent weakness in demand affecting the broader IT sector.
A stark contrast exists between the CEO’s remuneration and that of the average employee. The compensation ratio for the CEO compared to employees in India is 1647:1, while globally, the median employee’s compensation ratio stands at 556:1. Specifically, the median annual employee compensation in India is $13,735, compared to the global median of $40,660. This growing wage gap, coupled with Cognizant’s recent decision to defer employee pay raises by four months, has sparked dissatisfaction among the workforce.
Kumar’s predecessor, Brian Humphries, had a total SEC-reported compensation of approximately $4.2 million in 2023, which included his base salary until his termination date on March 15 of the previous year. Kumar’s compensation for 2023 was significantly higher than his target direct compensation due to several one-time awards upon his appointment as CEO. These included performance stock units (PSUs) valued at $3 million, restricted stock units (RSUs) worth $5 million (intended to replace forfeited equity from his previous role), and a cash sign-on bonus of $750,000.
The proxy filing detailed that SEC-reported compensation encompasses the base salary, annual cash incentives (ACI) earned by named executive officers (NEOs), cash bonuses, the grant date fair value of all RSUs and PSUs awarded in a year, and other compensations, including required perquisites. However, Kumar’s actual realized compensation for 2023 was $7.2 million, lower than his target direct compensation. This discrepancy is mainly due to his 2023 PSUs, including the CEO New Hire Award, being scheduled to vest based on future performance criteria, and a lower than target payout from his 2023 ACI award. Realized compensation is distinct from the SEC-reported amounts.
Additionally, Cognizant CFO Jatin Dalal’s target direct compensation was set at $5.2 million, comprising a base salary of $750,000, an ACI target of $750,000, and both PSUs and RSUs valued at $1.8 million each. Dalal’s SEC-reported compensation for 2023 was lower than his target due to only receiving a pro-rata portion of his salary, given his employment began in December 2023.